CA Nisha Pariyani
Following acts of yours will attract the provision of Sec 60:
Section 61: Revocable Transfer Of Assets
Mr. X transfers house Property to his friend Mr.Y for SEVEN YEARS. Here the transfer is revocable after seven years and therefore, the income from House Property will be clubbed with the income of Mr.X.
Section 62: Irrevocable Transfer Of Assets
Where an asset is transferred to ANY PERSON:
then all income arising from such asset shall be clubbed in the income of the transferee subject to transferors derives no direct or indirect benefit from such income in either case.
E.g.: Mr. A transfers his house property to Mr. B for the lifetime of Mr. B. The transfer is irrevocable and the income from HP from the date of trf. shall be included in the income of Mr. B. On the death of Mr. B, the income from HP shall be included in income of Mr. A from the date of death. The income shall be included in income of Mr. A even if Mr. A does not revoke the transfer on the death of Mr. B (because law says income shall be included in transferor’s income as and when power to revoke arises to transferor.”ACTUAL REVOCATION IS NOT RELEVANT”
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The following incomes of the spouse of an individual shall be included in the total income of the individual:
Then such salary, commission, fees, etc shall be considered as income of the individual and not of the spouse.
When both husband and wife have substantial interest
Where both the husband and wife have a substantial interest in a concern and both are in receipt of the remuneration from such concern both the remunerations will be included in the total income of husband or wife whose total income, EXCLUDING SUCH REMUNERATION, IS GREATER..
**Special comment: where such income is once included in the total income of either spouse, any such income arising in the subsequent year will not be included in the total income of other spouse unless the A.O is satisfied after giving that spouse an opportunity of being heard that it is necessary to do so.
*Concern means any form of business or professional concern. It could be a sole proprietor, partnership, company, etc.
*Substantial interest An individual is deemed to have substantial interest, if he /she (individually or along with his relatives) beneficially holds equity shares carrying not less than 20 per cent voting power in the case of a company or is entitled to not less than 20 percent of the profits in the case of a concern other than a company at any time during the previous year.
b. Income from ASSETS TRANSFERRED to spouse [section 64(1) (iv)]
Income from assets transferred to spouse becomes taxable under provisions of section 64 (1) (iv) as per following conditions:-
If the above conditions are satisfied, any income from such asset shall be deemed to be the income of the taxpayer who has transferred the asset.
* In case of House Property Section 27 applies.
**Special Comment: The relationship of husband and wife must exist both at the time of transfer of assets and at the time when income accrues in for the applicability of clubbing provisions.
Illustration – Mr. He transfers 500 debentures of IFCI to his wife without adequate consideration.
Interest income on these debentures will be included in the income of Mr. He.
NON APPLICABILITY OF SECTION 64(I)(IV):
In the aforesaid five cases, income arising from the transferred asset cannot be clubbed in the hands of the transferor.
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